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This home renovation could save you thousands of dollars — and it's easier to install than you might think

A heat pump system is absurdly efficient.

Heat pump system

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Most homeowners would jump at any opportunity to save thousands of dollars on home energy bills. And for anyone with an aging furnace near the end of its lifespan, you might be in luck. 

You can cash in on savings by installing a heat pump system, a cost-effective way to heat and cool your home.

Can a heat pump system save me thousands of dollars?

Because a heat pump system is so absurdly efficient, around two to four times more than traditional furnaces, you'll lower your heating costs by about 50%, according to the Department of Energy. 

Now, of course, the actual amount you'd save on your energy bills depends on the size of your house, how well-insulated it is, your local climate, and the type of home heating system you already have. 

But no matter how old your system is, you're likely to save serious cash. For example, if you have a propane furnace, you could expect savings of close to $855 a year. If you have a natural gas boiler, the annual savings would be closer to $200. And if you have an electric furnace, you could save close to $815 every year.

What is the cost of a heat pump system?

So, while it's clear that you'd save thousands of dollars in electricity bills over the life of your heat pump system, it doesn't come without a cost. 

Buying and installing a heat pump in a 2,000-square-foot house may cost roughly $14,000, which is no small chunk of change.

However, thanks to the Inflation Reduction Act, you could get up to $8,000 back if you install a heat pump system in your home. But the savings may not stop there. 

Homeowners upgrading to a heat pump system may be able to double dip, receiving both an $8,000 rebate, as well as a 30% tax credit on the remaining amount of the system. 

So if a new heat pump system costs you $14,000, you could get up to an $8,000 rebate and a 30% tax credit on the remaining $6,000, equaling $1,800. So now, the price has dropped from $14,000 all the way down to $4,200. 

Pair that with a potential savings of $1,000 a year, and the system would pay for itself in just over four years.

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